Nasscom's Rs 100 cr fund to aid IP creation

The Rs 100 crore Innovation Fund announced by the National Association of Software and Service Companies (Nasscom) will provide seed-stage funding to firms involved in intellectual property (IP) creation.

A first of its kind initiative by Nasscom, the fund will support companies dealing with emerging technologies and life sciences. IP creation, however, is a must.

"We are not looking at call centers, knowledge process outsourcing (KPO) companies or BPOs," Rajdeep Sahrawat, vice-president, Nasscom, told Business Standard.

"Big companies, especially the large global players have their own research and development (R&D) budgets and access to venture capitalists. This fund is targeted at companies creating original IP and require support in the early stages," he said.

Nasscom is currently putting together a detailed plan for the Innovation Fund, which it will share with companies in the near future.

The core model is that it will be run as a separate commercial entity with the fund corpus created by industry firms. Contributions to the fund is purely on voluntary basis although it is not restricted to IT companies.

"Several IT companies and even financial institutions have also shown interest in contributing to the fund," Sahrawat said. Nasscom will perform the role of a facilitator and enabler.

The industry body has identified the following as key focus areas for the fund: wireless broadband, automotive infotronics, multimedia convergence, medical devices, life-sciences and embedded platforms.

"As these areas have a higher risk profile and longer payback periods when compared to traditional services, most venture capitalists do not invest at the seed stage," he said.

According to KPMG Global Head (Sourcing Advisory) Pradeep Udhas, such a fund is also likely to provide much needed impetus to IT R&D in the country.

"Globally, companies spend 8-9 per cent of their total budget on R&D. In India, it is only around 2 per cent. Since IT is where India has an edge, we must help innovators unleash their creativity," he said.